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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Flextronics International Ltd was 1.16. The lowest was -6.74. And the median was -2.49.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Flextronics International Ltd for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 1.1548||+||0.528 * 0.8837||+||0.404 * 2.0376||+||0.892 * 0.9137||+||0.115 * 1.0566|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1512||+||4.679 * -0.0254||-||0.327 * 0.9905|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $2,585 Mil.|
Revenue was 6763.177 + 6316.762 + 5566.248 + 5951.6 = $24,598 Mil.
Gross Profit was 452.467 + 396.916 + 352.341 + 378.817 = $1,581 Mil.
Total Current Assets was $8,957 Mil.
Total Assets was $13,050 Mil.
Property, Plant and Equipment(Net PPE) was $2,240 Mil.
Depreciation, Depletion and Amortization(DDA) was $518 Mil.
Selling, General & Admin. Expense(SGA) was $881 Mil.
Total Current Liabilities was $7,152 Mil.
Long-Term Debt was $2,741 Mil.
Net Income was 148.91 + 122.977 + 110.85 + 135.112 = $518 Mil.
Non Operating Income was -44.415 + -45.748 + -33.174 + -91.113 = $-214 Mil.
Cash Flow from Operations was 277.777 + 299.719 + 362.276 + 124.61 = $1,064 Mil.
|Accounts Receivable was $2,450 Mil.
Revenue was 7025.054 + 6528.517 + 6642.745 + 6723.934 = $26,920 Mil.
Gross Profit was 408.657 + 377.081 + 380.785 + 362.144 = $1,529 Mil.
Total Current Assets was $9,133 Mil.
Total Assets was $12,090 Mil.
Property, Plant and Equipment(Net PPE) was $2,115 Mil.
Depreciation, Depletion and Amortization(DDA) was $524 Mil.
Selling, General & Admin. Expense(SGA) was $838 Mil.
Total Current Liabilities was $7,209 Mil.
Long-Term Debt was $2,046 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(2584.909 / 24597.787)||/||(2449.773 / 26920.25)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(396.916 / 26920.25)||/||(452.467 / 24597.787)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (8956.604 + 2239.921) / 13049.518)||/||(1 - (9133.22 + 2114.681) / 12090.473)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(523.759 / (523.759 + 2114.681))||/||(518.179 / (518.179 + 2239.921))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(881.411 / 24597.787)||/||(837.961 / 26920.25)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((2741.474 + 7152.271) / 13049.518)||/||((2045.569 + 7208.722) / 12090.473)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(517.849 - -214.45||-||1064.382)||/||13049.518|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Flextronics International Ltd has a M-score of -2.19 signals that the company is likely to be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Flextronics International Ltd Annual Data
Flextronics International Ltd Quarterly Data